Investors Presentation February 2012
Contents 1. Overview 2. Strategy and Growth 3. Financial Highlights and Projections 4. Our Intellectual Assets Note: The financials for 2011 in the presentation are based on unaudited final year accounts 2
Where we are now, and how we got here OVERVIEW 3
Group snapshot Savola today • • Listed on the Saudi stock exchange Sales of SAR 25 billion in 2011 and SAR 21 billion in 2010 • • One of the largest players in a fast growing region Net Profit of SAR 1,202 million in 2011 and • Leading brands SAR 887 million in 2010 • • Modern state of technology and design capabilities Workforce of more than 16,000 employees • • Well-positioned to explore strong growth in the future More than 120,000 shareholders • • Market Capitalization of around SAR 15.5 billion 1 Operations covering foods, retail, plastics packaging, real estate, and strategic investments Diversified shareholder base 1 Mesk Holding Company 12.0% GOSI 10.9% Abdullah Alrabiea 8.7% A.Q. Al Muhaidib & Sons 8.5% Others 59.9% Note: 1. As at 25 January 2012 Among the top diversified conglomerates in Saudi Arabia 4
History – Key stages of development One of the top food, retail and plastics packaging Today Companies in the region 2011 Acquired Pasta business in Egypt Acquisition of Giant and Géant by Panda 2008 - 09 Acquisition of Yudum in Turkey Formed Kinan in 2005 and disposed 70% stake in 2006 2004 - 07 Acquired oil business in Iran in 2004 1998 Entry into retail sector through merger with Azizia Panda 1997 Entered sugar refining business Started Jeddah plastics factory 1991 Acquired 40% stake in Almarai 1990 Obtained 70% of the Saudi edible oil market 1979 Established in 1979 with paid up capital of SR 40m 1979 1985 1990 1991 1995 1998 1999 2000 2002 2003 2005 2007 2008 2009 2010 5
2011 Key achievements The Group achieved record SR 1 billion net income from operations, despite: – Increase in commodity prices, raw material supply issues – Arab Spring Started implementing holding company structure (Project Focus) Savola ranked No. 1 in KSA and No. 2 in the Arab World in corporate governance and transparency, as per S&P and Hawkamah Institute Divestment of non-core investments Successful addition of new line of business in Foods (i.e. Pasta) Repatriation of dividends from Iran (c. 30% of investment) Trained and employed 135 special needs people in the Group companies 6
2011 Key achievements Foods • International start-up operations including • SFC net income more than doubled to SAR 490 million in 2011 despite Arab spring, Iran Sudan and Algeria delivered excellent profits • Acquired Pasta company in Egypt sanctions and FX devaluation • Launch of Sweeva (sweetener) in KSA • Although, volume growth was moderate (1%), Arabia oil still achieved strong growth (11%) Retail • Awarded GCC “Best Training Strategy” • 2011 Net profit increased almost threefold to • First Shariah compliant co-branded grocery SAR 200 million retail credit card in KSA (SAMBA) • Sales growth of SR 850 million (+12%) • Prince Naif Saudization Award • 11 new store openings • Awarded “Asia’s Best Brand Award” for excellence in branding and marketing Plastics packaging • Despite an increase in raw material prices, SPS • Named as one of the top 3 converters in the has been able to achieve a healthy margin ME region (SABIC) • 6% to 7% growth rate of local plastic packaging 7
Group structure Savola Group Plastics Foods Retail Investments Packaging Total SAR 1.0 billion Revenue SAR 9.2 billion SAR 25.3 billion SAR 15.2 billion Super and Oils Percentage of Revenue Hyper 2010 2011 Sugar Retail Retail Pasta 36.3% 38.9% Foods Foods 57.2% 60.1% Plastics Plastics 4.0% 4.2% 8
Foods - Oil Overview Current markets • Established in 1979 • Manufacturing facilities in 8 countries Kazakhstan • Exports to 30 countries with strong marketing and Turkey distribution capabilities primarily in the GCC, CIS Iran Morocco Algeria Saudi Egypt and African regions Arabia • Top brands such as Afia, Arabi, Rawaby, Ladan, Sudan Yudum • Production capacity of over 1.5 million MT pa Key markets Capacity Market share • Internationally recognized production and quality Saudi Arabia 416,000 60% awards including ISO 9002 and MRP2 Egypt 352,000 41% Iran 832,000 39% Algeria 192,000 33% Kazakhstan 64,000 26% Morocco 96,000 10% Afia nominated top Sudan 96,000 33% brand of the Arab world Turkey 96,000 15% by Forbes magazine Strong presence in all the markets that Savola is operating in 9
Foods – Sugar Overview Current markets • Established in 1997 • Strategic partnership with Tate and Lyle, England • Egypt Raw Cane Refineries in Saudi and Egypt Saudi Arabia • Exports to Sudan, East Africa, Levant, GCC, Sudan and Yemen • Top brands such as Al Osra, Ziadah, Safa Key markets Capacity • Current refining capacity of 2.0 million MT pa Saudi Arabia (Jeddah) 1.25 million • Under construction Egypt - 0.18 million MT pa Egypt - Cane 0.75 million (beet) Egypt – Beet (under 0.18 million construction) Accolades and Awards 1 Ranked amongst the top three buyers of raw sugar 2 Jeddah is in top three refineries in the world Ranked amongst the top three sugar refineries in the world 10
Foods – Pasta Overview Current markets • Established in 1995 and was 100% acquired by Savola with a transaction value of around SAR 448 million (EGP 715 million) • Owns 2 factories with total capacity of around Egypt 124,000 MT pa • The company is the largest pasta manufacturer in Egypt with 30% market share (out of audited Key markets Capacity Market share branded market) Egypt 124,000 30% • Total of 6 brands including Al Maleka, which is the largest brand One of the largest pasta producers in the region 11
Retail Overview Current markets • Operates in two formats • Supermarkets [1,800m 2 ~2,500m 2 ] • Distribution Center Hypermarkets [7,000m 2 ~12,000m 2 ] Lebanon • Established in 1998; acquired by Savola in 1998, to represent the retail arm of the Group • Widespread branch network of 90 supermarkets and 41 hypermarkets in Saudi United Arab Emirates • Saudi Arabia Total selling area of around 462,000 m 2 • Expansion plans are to operate 140 Supermarkets and 60 Hypermarkets by 2015 in Saudi Arabia Accolades and Awards 1 Asia’s Best Employer Brand Award 2011 2 Prince Naif Saudization Award 2 nd CMO Asia award for Excellence in Branding & Marketing 3 4 Best Training Strategy in GCC Award Largest retailer in Saudi Arabia in terms of sales and selling area 12
Plastics Packaging Overview Current markets • Established in 1980 • 4 manufacturing facilities in Saudi Arabia and 2 in Egypt Egypt Saudi Arabia • Exports to 15 countries worldwide • Product range comprises of film, packaging materials, bottles, closures, pre-forms, industrial containers and crates Key markets Capacity (MT pa) • Production capacity of 140k MT pa SPS (Riyadh and Jeddah) 82,500 Al Sharq (Riyadh) 36,300 New Marina (Egypt) 23,700 Accolades and Awards 1 King Abdulaziz Quality Award 2 MRPII Class A 3 ISO 9001 4 HACCP One of the leading regional plastic packaging companies 13
Where we want to go, and how we will get there STRATEGY AND GROWTH 14
Holding structure Focused Growth Autonomy and Accountability Entering new businesses OpCos to be managed independently Moving away from non-core investments Governance system + Profitability enhancement and cost rationalization Management structures Mergers & Acquisitions Human resources Organic expansion + Total capital expenditure of around SAR 700 million in 2009 Increase shareholders’ value 15
Corporate structure evolution The Savola Group Corporate Structure Evolution Independent operating companies, with Financial Holding High holding company focused on performance of Company the portfolio OpCo Autonomy Medium Strategic Management Holding company providing strategic guidance Company with no operational decision making Holding company monitoring closely and guiding Active Management Low operating companies, with involvement in Company operational and strategic decisions Past Model Savola’s Current Model Target Model Time Aspiration to transform the Group into a Financial Holding Company Total capital expenditure of around SAR 700 million in 2009 16
New operating model The Savola Group Board of Directors Group Level Audit Committee Investment Committee Risk Committee CSR Committee CNCG Committee Holding No reporting lines between Level The Savola Group CEO portfolio businesses and Group holding Board of OpCo’s (7 members) to be formed as follows: Portfolio Business Level Group board members (4), shareholder representative (1) and independent subject matter experts (2) OpCo’s to set up statutory committees as per CMA best practices Foods Retail Plastics Almarai Herfy Kinan Other Board Board Board Board Board Board Boards CEO CEO CEO CEO CEO CEO CEOs Core Businesses (OpCo) Active Investments Other Investments 17
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